Pressure is mounting on the Election Commission to dissolve the Thai Raksa Chart Party for nominating Princess Ubolratana as its prime ministerial candidate, even though it has now agreed to withdraw the nomination.
But a Friday night palace statement read on all Thai television networks called the princess's candidacy "extremely inappropriate" and against the "nation's traditions, customs and culture".
Thai Raksa Chart party leader Preechapol Pongpanich holds Princess Ubolratana's prime ministerial candidate application at the Election Commission office in Bangkok on February 8, 2019.
Such a move would break with the tradition of the Thai royal family publicly staying out of politics.
Hours after she was registered as a candidate, a political party supporting Prayuth filed an objection with the Election Commission, arguing that the action broke rules banning the use of the royal institution as part of a political campaign.
The move rattled the status quo and threatened the ambitions of the generals who have controlled Thailand since they toppled the administration of Yingluck Shinawatra nearly five years ago.
In a strongly worded statement, the king said senior royal family members should remain above politics and be politically neutral.
He cited Section 92 of the 2018 Political Party Act, which stipulates that the EC, after obtaining credible evidence that a political party has committed an act deemed hostile to the constitutional monarchy rule, must propose the dissolution of the party to the Constitutional Court.
Ubolratana, a mathematics and biochemistry graduate from the Massachusetts Institute of Technology, has a reputation for being more accessible to commoners than the rest of the royal family.
"This act of mine, I have done out of sincerity and intention to sacrifice in this request to lead the country to prosperity", she said.
A telecom tycoon who entered politics in the 1990s, Thaksin won the support of millions of rural Thais with expanded welfare programs, but opponents accused him of graft and challenging the power of the monarchy. In terms of the outcome, while Prayut was seen as being the likely victor by far in upcoming polls, the most likely scenario now is a unity, royal-led government with Ubolratana at the helm, with Thaksin's influence at play and some role for Prayut-linked forces as well.
Born in 1951, Princess Ubolratana Rajakanya Sirivadhana Barnavadi is the oldest child of Thailand's late King Bhumibol Adulyadej.
She thanked supporters Saturday on her widely followed Instagram account, saying vaguely that she wanted Thailand to "move forward".
Thailand's royal family is seen as semi-divine, but Ubolratana resigned her royal title of princess in 1972 when she went to college in the United States.
She's starred in several soap operas and movies, she's known for her charity work with young Thais, and is a prominent figure on social media.
2004: Ubolratana's son, Bhumi, is killed in the Indian Ocean tsunami.
Soon after Friday's announcement, her catchphrase #SongPhraSlender (Long Live Slender) was number one on Twitter in Thailand.
Why is the election important?
Thai Raksa Chart is an off-shoot of the main pro-Thaksin Pheu Thai party, whose government, led by Thaksin's sister Yingluck Shinawatra, was ousted from power in 2014 in a coup led by then-army chief Prayuth. Thaksin himself was overthrown in a 2006 coup and both he and Yingluck now live in exile.
In 2016, Thais voted to approve a new constitution created by the country's military leaders, which was designed to perpetuate military influence and block Mr Thaksin's allies from winning another election.
Thailand has among the world's toughest lese-majeste laws, which make it illegal to defame, insult or threaten the king, queen, heir apparent or regent.
The surprise move by his sister into politics - assumed to be with the king's approval - raised questions about whether the long-lasting partnership of the palace with the army is in jeopardy.